A fast fix for most AVS problems

by Neil Moncrief on June 30, 2009

For years, I’ve been a supporter of the Address Verification Service (AVS), especially when it comes to e-commerce.I’ve seen it protect merchants from thousands of dollars in loses.As a former e-commerce business owner myself (co-owner of 2BigFeet.com), I used it to identify and prevent countless fraudulent orders that would have otherwise resulted in chargebacks.But too often, I hear stories from business owners about a time when AVS flagged an order from a “good customer.”As a result, some merchants have lost faith in the system and have abandoned it altogether.Just because of one or two bad experiences, these merchants willingly risk accepting bogus orders (and certain chargebacks) rather than risk angering good customers with false positives.

Most e-commerce businesses use AVS to reject fraudulent orders before they ever reach your fulfillment department, so you typically won’t know how many were blocked. And, since criminals don’t usually call and complain about their rejected orders, the false positives receive a disproportionate amount of attention. That being said, I’ll agree that AVS is not perfect. But many of the problems that legitimate customers experience are the fault of card issuing banks, not the AVS system itself. If you’ll follow the steps outlined in this post, you can reduce your false positives to a manageable number and benefit from the added security AVS offers.

If your customer’s order is rejected, she’s already going to be disappointed. First, and foremost, don’t allow your shopping cart to make the situation worse! The goal here is to have the affected customer call your customer service number immediately. Some carts use default messages that were obviously written by cold-hearted programmers, not warm-hearted customer service professionals. If you don’t know what message your rejected customers are seeing, put yourself in their shoes. Place a test order using a bad address. If the resulting message could make customers feel at fault or ignorant, change it. Avoid words like “mistake.” (Men, if you’re not the warm, fuzzy type, get a woman to help you.) Make sure your customers believe you really want to help fix this minor issue, or they’ll leave without giving you the chance.

Often, the customer will have already called the card issuing bank prior to calling you. If the bank told the customer the charge was approved (indirectly placing the blame on you), the customer may already be irritated when you answer the phone. You should understand, and be prepared to explain, that all orders must be approved by both the card issuing bank and the payment gateway. Since the bank only verifies the customer’s available credit, it will approve most orders. But your gateway checks addresses using the AVS system. And if the gateway is not satisfied with the AVS results, it will deny the order (even if the bank has already approved it.)

When the customer calls, apologize for the inconvenience. Explain that the problem could be the result of a bank error. Assure her that you’ll do everything possible to get the order approved. Finally, ask the customer if she has changed addresses within the past five years. Although this may sound like a strange question, it is very important. If the customer ever received her credit card statements at another address, regardless of how long it’s been, ask for that address. Beg for it, if necessary, even if she assures you that she’s shopped elsewhere using her new billing address. (Due to different merchants, different payment gateways, and different AVS thresholds, your business could refuse an order that another business might have approved.)

Try the order again, using the old billing address in place of the newer address. For reasons I don’t completely understand, inserting the old address corrects the problem about 75% of the time. It’s my theory that some banks’ computers use one set of address fields for mailing monthly statements and another set of fields for AVS. I suppose that when customers move and notify their card issuing banks, the banks may update the fields used for statements and forget to update the AVS fields. I haven’t been able to confirm this, but it makes sense. Using this approach, I’ve seen orders approved using addresses that were 5 years out-of-date!

If this doesn’t work, you should apologize and ask the customer to try another credit card. If the customer doesn’t have another card, you’ll have to choose to either a) disable AVS long enough to force the order through, or b) turn the customer away. In my seven years of e-commerce management, during which we approved tens of thousands of orders, I could count on one hand the number of times I had to make this choice.

Hopefully, this procedure will help you get more out of the Address Verification System. Keep in mind, though, that AVS does have other limitations. AVS usually will not verify customers with billing addresses outside the U.S. And if your customer is using a card issuing bank located outside the U.S., AVS may experience problems there, as well. Otherwise, you should be able to count on the AVS system to work nearly 100% of the time.

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Does the issuing bank check out the card owner name or just check out the address on file only ? If they don’t it is a big loophole for the thief. Please comment so I know whether the issuing bank does it job thoroughly or not

I can’t say with certainty which inputs are checked and which are ignored because I don’t represent the card issuing banks. But in my personal experiences as a past owner of an e-commerce business, the 2 most critical entries were the street number (not the street name) and the 5 digit zip code. If my customers entered those correctly, their orders were approved.